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The net worth of volunteers

Adding the value of volunteer aid to the balance sheet not only increases a charity's worth, writes Helen Verney, it also gives managers the opportunity to make the best use of the goodwill of citizens.

If the charity volunteer activity in this country were valued, it would double the GDP of the voluntary sector overnight, according to research.

Studies also suggest that with a national average of four hours per week, volunteering is likely to be worth more than three times as much as the total charities receive in donations each year.

Volunteers perform two-thirds of the work of Britain’s biggest charities, and yet relatively few charities today record the time gifted to them each year. Some count the number of volunteers they recruit and retain each year but few have adequate records of the skills of their volunteers, whether they have exploited those skills, and how much time has been given.

Statutory accounting for charities has many weaknesses, not least the inconsistency of methods used in their preparation.

The Statement of Recommended Practice (SORP) currently requires the valuation of gifts in kind and secondee time, but does not yet include volunteers.

And yet there’s an argument that says accounts are materially misstated by not including valued volunteers.

Charities have traditionally focused a significant amount of time on analysing income growth, often more than outcomes. Income is easy to measure and that information is publicly available by law. But as yet there is no statutory requirement for charities to value their volunteers, and as a result there are few reliable figures relating to this committed form of giving.

But if charities were required to value their volunteers and disclose it in their accounts, those figures would be analysed as furtively as income figures are today, and I am sure charities would spend increasing amounts of time looking at the shifting support of those who give committed time.

As the government increasingly turns to charities to fill gaps in service provision, and use them as a sounding board for policy direction to provide the added value that local authorities all so often fail to deliver, the whole subject of volunteer valuation becomes all the more poignant.

The government now recognises the huge voluntary workforce that exists in Britain, representing 400,000 voluntary organisations using more than 20 million volunteers. ‘Active citizenship’ is a core of the school syllabus.

At the same time, charities are increasingly being asked to meet targets and indicators in order to be eligible to receive funding. The European Social Fund already requests volunteer valuation information when granting funds.

Accounts can paint an intimate first picture of an organisation and, for many charities, the balance sheet is a key communication tool to potential funders. Often the message a charity wishes its accounts to convey is one of stretched resources, low reserves but incredibly worthwhile activity and cause. Volunteer valuation has a vital role to play in forming this message.

And yet the valuation and disclosure of volunteers is likely to be controversial, potentially biased and its inclusion within statutory accounts is almost certain to provoke a reaction – whether it be positive or negative – among stakeholders.

This issue is particularly relevant at a time when there is anxiety over current trends, which show declines in giving generally. It seems shortsighted not to value a resource that could be worth more in cost savings than the total income of the sector.

Taking a stewardship view, the two key responsibilities of trustees are to act in the best interests of the charity and protect its assets. But how can trustees effectively fulfil these responsibilities if volunteers are not measured and accounted for? Without that information, it is at best difficult and at worst impossible for trustees to judge whether the organisation is maximising the use of its volunteers.

Valuation methods need to be explored in more depth. None of us wants to see timesheets for our volunteers, and a key challenge facing charities over the next few years is to find other ways to produce auditable records to support valuations. We need to work together in a positive and challenging way to find the answers. But the potential rewards could be huge.

The requirement to value volunteers is not likely to happen overnight, but the Charity Commission expects to see volunteer valuation in the regulations within five years. But while the intellectual argument is not in question, the problem is a practical one – how to do it reliably without overloading charities with work, while risking alienation of volunteers.